The level of inventory of a manufactured product has increased by 5,000 units during a period. The following data are also available: ⚫ Variable manufacturing costs per unit = $15.00 • Fixed manufacturing costs per unit = $8.00 ⚫ Variable operating expenses per unit = $5.00 ⚫ Fixed operating expenses per unit = $2.00 What would be the effect on income from operations if absorption costing is used rather than variable costing? a. $40,000 decrease b. $40,000 increase c. $50,000 increase d. $50,000 decrease

The level of inventory of a manufactured product has increased by 5,000 units during a period. The following data are also available: ⚫ Variable manufacturing costs per unit = $15.00 • Fixed manufacturing costs per unit = $8.00 ⚫ Variable operating expenses per unit = $5.00 ⚫ Fixed operating expenses per unit = $2.00 What would be the effect on income from operations if absorption costing is used rather than variable costing? a. $40,000 decrease b. $40,000 increase c. $50,000 increase d. $50,000 decrease

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 47E: Klamath Company produces a single product. The projected income statement for the coming year is as...

See similar textbooks

Similar questions

provide the answer pls.
Vinubhai
The following income statement applies to Franklin Company for the current year: Income Statement Sales revenue (410 units × $31) Variable cost (410 units × $16) Contribution margin Fixed cost Net income Required a. Use the contribution margin approach to calculate the magnitude of operating leverage. b. Use the operating leverage measure computed in Requirement a to determine the amount of net income that Franklin Company will earn If It experiences a 10 percent increase in revenue. The sales price per unit is not affected. c-1. Verify your answer to Requirement b by constructing an income statement based on a 10 percent increase in sales revenue. The sales price is not affected. c-2. Calculate the percentage change in net income for the two income statements. Req A and B Complete this question by entering your answers in the tabs below. Req C1 a. Operating leverage b. Net income $ $12,710 (6,560) 6,150 (4,100) $2,050 > Answer is complete but not entirely correct. Req C2 a. Use the…
A company has provided the following data: Sales 3,000 Units Sales price $ 70 per unit Variable cost $ 50 per unit Fixed cost $ 25,000 If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, operating profit will: decrease by $15,000. decrease by $31,875. increase by $20,625. decrease by $3,125.
Total production capacity =2,00,000 units. Year 2015: Sales units=80,000 Total cost=34,40,000 Year 2016: Sales units=1,20,000 Total cost=45,60,000 There has been no change in the cost structure and selling price and it is anticipated that it will remain unchanged in the year 2017 also. Selling price is 40 per unit. Calculate: 1.Variable cost per unit 2.Profit Volume 3.Break-Even Point (in units)
Miller Company's most recent income statement follows: Sales (18,9e0 units) Less: Variable expenses Total $504, 000 126, 000 Per Unit $ 28 Contribution margin 378,000 $ 21 Less: Fixed expenses 53,00 $325, 000 Net income Consider each of the following cases independently. Required: 1. Prepare a new income statement if the sales volume increases by 30%, and the selling price decreases by $4.00. (Do not round Intermedlate calculations. Round "Per Unlt" answers to 2 decimel places.) Total Per Unit Sales
General Accounting
Answer please
In March, James Electronics had sales of $2,550,000 (25,500 units), total variable expenses of $1,275,000, and total fixed expenses of $825,000. Required: 1. What is the company's CM ratio? CM ratio % A 2. Using the CM ratio, calculate the break-even level of sales in dollars. Break-even level of sales in dollor 3. What is the break-even level of sales in units? Break-even level of sales in units units
General accounting
A company has return on sales of 15% at sales of $400,000. Its fixed cost are $90,000; variable costs are $25 per unit. A. What are sales in units? Why? How? B. What is contribution margin per unit? Why? How? C. What is income? Why? How?
A company with a break-even point at $900,000 in sales revenue had fixed costs of $225,000. When actual sales were $1,000,000, variable costs were $750,000. Determine the following: Round your percentage answers to the nearest whole number. a. Margin of safety expressed in dollars b. Margin of safety expressed as a percentage of sales c. Contribution margin ratio d. Operating income % %